31 May 2011

OHIM User Associations Comment on Revision of CTM System at Hearing Before EU Commission

The "Study on the Overall Functioning of the European Trade Mark System" og the Munich Max Planck Institute for Intellectual Property and Competition Law, which has been release in February this year, has triggered a broad and ongoing discussion on the European CTM system among European trademark practicioners and the IP community in general.

To discuss the study's impact on CTM regulation and the Trade Mark Directive 89/104/EEC, the European Commission's Directorate General MARKT invited the OAMI Users' Group (international NGO's from the IP sector, such as MARQUES, ECTA, AIPPI or INTA) to present their views on selected questions as raised by the Commission (see agenda). The hering took place on 26 May 2011 in Brussels. The Commission only listened and did not answer any questions.


The agenda of the meeting included a number of issues being highly relevant to both trademark applicants and representatives, some of the topics being controversially discussed among CTM system users for quite a while: 

1. Requirement for a CTM to be put to genuine use in the Community: to what extent do users agree with the relevant findings and proposals of the MPI study (pages 135-139 of the study)?

2. Distribution of 50% of renewal fees by national offices: what do users think of the position of the study concerning the objectives (pages 243-244, point 5) and the recommended key of distribution (in particular, the suggestion to take the number of NATIONAL applications filed each year as a measure, page 241, item 1.23)?

3. Simplification of CTM procedures by shortening deadlines: to what extents do users agree with
  1. abandonment of the one month deadline for payment of the application fee and its substitution by a system according to which at least the order for payment must be made together with the application,
  2. shortening of the opposition period?
  3. deletion of the "extra" two months period for setting out the grounds of appeal?
  4. reduction of the term from which the three months opposition period is calculated for Madrid marks designating the EU?
4. Current regime on searches (including both mandatory CTM searches and optional national searches): what should be done with it? Would the provision of equivalent, automated priority search tools by the OHIM, free of charge, constitute an adequate substitute for the current system?

5. Filing of CTM applications through national offices: should this option be kept even though relevant applications have become near extinct (0,5 %)? Could it be replaced by the possibility of direct, assisted e-filing of CTMs at national offices?

6. Further harmonisation beyond the scope of the current TMD:
  1. what do users think of the proposals of the study for further substantive harmonization regarding a body of rules addressing trademarks as objects of property (covering transfers and assignment, licences, rights in rem, levy of execution and insolvency, see pages 226-227),  
  2. which provisions of procedural law are considered of major priority to be included (some examples being given by the Commission). The user associations were asked to pick three or four issues of major concern.
7. Use of class headings: what do users think of the proposals of the study to resolve this issue (page 171-172, items 4.59 to 4.64)?

8. Class fees: How do users see the Study propsal of having a separate class fee from the beginning, and not merely starting from the fourth class (both at EU and national levels)?

9. Certification marks: what do users think of creating a Community system for certification marks (page 212 of the study, item 20)?

10. E-Business: to which extend do users encounter legal difficulties with e-certificate? Does this need a clear legal basis in the CTMR?

    I am happy to be able to report below on what the delegates of MARQUES consider the outcome of the hering.

    1.  Requirement for a CTM to be put to genuine use in the Community. The study proposes that political boundaries do not constitute valid criteria in determining the genuineness of use and that Article 15 CTMR should be left unchanged (item 3.30 on page 139 of the study).

    This found unanimous support by all user associations, although UNION suggested to clarify Article 15 to state that use, in order to be genuine, must be of more than mere local significance.

    The study further suggests (item 3.31 on page 139) that use of a younger national trademark in a member state REMOTE from the part of the Community where a conflicting earlier CTM was used should be allowed, if the earlier CTM has been registered for at least 15 years, use of the CTM in the remote member state was ONLY MINIMAL and the later mark was applied for in GOOD FAITH.
    The user associations unanimously disagreed with this approach, stating that it is both against the unitary character of the Community Trademark and against the concept of a single European market. Also it would create more problems than it solves.

    The Commission considered this a "clear vote".

    2. Distribution of 50% of renewal fees by national offices. Some user associations repeated their view that they are against the distribution of 50% of CTM renewal fees. All user associations stated that the money should be spent in the interest of the users of the system. Some associations specifically requested supervision and control of how the money is spent (e.g. MARQUES, INTA, ECTA), AIM suggested EU-wide harmonized governmental budget rules for national offices, and other associations suggested that the money must be spent only for specific services, such as services on top of regular services. There was unanimous agreement that measures should be taken to prevent that the money disappears in state budgets.

    Not many proposals were made for the distribution key. In general, there seems to be agreement that, if at all, the distribution key should depend on how much service is provided to the users by the offices.

    3. Simplification of CTM procedures by shortening deadlines.

    a) abandonment of deadline for payment of application fee: Representatives of OHIM explained that, with this proposal, OHIM would like to facilitate the system and align it with the Community Design Regulation where payment has to be made immediately. Also, may be even more important for OHIM, the registration speed shall be increased by such measure.

    The user associations presented various very different reasons for MAINTAINING the one month term for payment, unanimously. However, it was suggested that the OHIM could only start examination of a trademark application after receipt of such payment (APRAM, MARQUES). If the registration procedure is delayed by late payment, this should not be of concern to OHIM as it is the free choice of the applicant.

    b) shortening of the opposition period: Again, the basis for this proposal is OHIM's desire to speed up the registration procedure which is delayed by the three months opposition term because registration occurs after termination of the opposition term or subsequent opposition proceedings.

    The user associations unanimously voted for maintaining the three months opposition term (e.g. IPA, APRAM, ITMA, CNIPA, UNION, EFPIA, ECTA, GRUR, CIPA, MARQUES) and presented many different reasons for this. It was suggested, however, that the three months opposition term should be unified throughout the Member States.

    c) deletion of the "extra" two months period for setting out the grounds of appeal. This proposal is a further attempt of OHIM to reduce the duration of proceedings (here appeal proceedings) before OHIM.

    Also in this question, there was an unanimous voice of the user associations that the two months for lodging an appeal plus additional two months for submitting the grounds in support of the appeal should definitely be maintained for various reasons (e.g. ECTA, MARQUES, GRUR, INTA, UNION, EFPIA).

    Interestingly, during the last OAMI Users Group Meeting in Alicante on 15 April 2011 the same issues were discussed with the same unanimous vote from the user associations. It was therefore surprising to see the same questions raised by the European Commission here again. However, after all, it would also be very surprising if the European Commission would propose a change of the law against the unanimous vote of the users.

    d) reduction of the term from which the three months opposition period is calculated for Madrid marks designating the EU: Currently, the three-months opposition term begins six months after republication of the international registration by OHIM. The purpose was to give the applicant the option to withdraw the application after he has received the national search reports and Community Search Report. Now, since national search reports are optional and rarely requested, the proposal in the study is to limit the six-months period to three months.

    It was suggested by MARQUES to reduce this term even further, considering that establishing the Community Search Report should take less than three months and in order to enable OHIM to inform WIPO about both absolute grounds of refusal and relative grounds of refusal in a single statement within six months after republication of the international registration.

    There was general agreement among the user associations with the proposal in the study to reduce this term from six months to three months or even less than three months (e.g. INTA, UNION, GRUR, ECTA, APRAM).

    4. Current regime on searches: A majority of user associations were of the opinion that national searches should be dropped and the CTM search should be kept optional (AIM, MARQUES, APRAM), whereas some user associations even preferred to abandon the searches entirely as they were considered useless (INTA). APRAM and ITMA wanted to maintain the mandatory CTM search.

    As regards automated search tools offered by OHIM free of charge, various user organizations stressed that OHIM should not provide legal advise on conflicting earlier rights (e.g. INTA, ECTA, Business Europe, AIPPI, MARQUES, EFPIA).

    5. Filing of CTM applications through national offices. Some user associations agreed that this option should be abolished (e.g. GRUR) whereas other user associations favoured maintenance of this option (e.g. INTA, AIPPI, ECTA). However, other associations insisted that, even if the number is low (0,5% equals about 450 cases per year), before abolishing the system one should find out the reasons and/or the type of applicants making use of this option (e.g. MARQUES, CIPA, UNION).

    6. Further legislative harmonization beyond the current scope of the TMD.

    a) further substantive harmonization regarding a body of rules addressing trademarks as objects of property. It seems that all user associations are in support of such substantive harmonization, but that care should be taken because some areas of the law cannot be harmonized under EU-law but are at the discretion of national laws. UNION even suggested that rather than harmonizing the law in this respect, identical national legal systems should be set up.

    b) which provisions of procedural law are considered of major priority to be included. The user associations were asked to pick three or four issues of major concern. While the user association states that all examples given by the Commission were important, it seems that the most relevant issues of concern were in the following order:
    •  providing administrative procedures for cancellation and opposition proceedings (e.g. MARQUES, INTA, APRAM, ECTA, GRUR, ITMA, ...)
    • abolishing ex-officio examination of relevant grounds (e.g. MARQUES, INTA, APPA, GRUR, FPIA, ...)
    • defence of "absence of genuine use" in opposition proceedings (e.g. MARQUES, INTA, ITMA, ...)
    • the option to base an opposition on a number of different rights (ECTA, ITMA) offering the same grounds for opposition in all member states (APRAM)
    Further suggestions were:
    • harmonizing the starting date for calculating the term for paying prolongation fees of converted CTMs (APRAM)
    • application numbers and registration numbers should be identical (AIM).
    7. Use of class headings. This question involves two issues, namely whether or not the use of class headings should be permissible and the scope of protection if class headings are used.

    Various user organizations considered the use of class headings being too broad (e.g. ECTA, APRAM, UNION, ...), whereas others were in support of the use of class headings (e.g. associations representing the pharmaceutical industry) while others expressed that they are not against the use of class headings (e.g. MARQUES).

    As regards the scope of protection, the Study suggests that, if a product does goods do not fall within the particular meaning of a general indication of a class heading, there is no reason to consider that the application/registration claims such product ("means-what-it-says" approach) contrary to the practice at OHIM ("class-heading-covers-all" approach). There was unanimous consent among all user associations that the means-what-it-says approach should prevail (e.g. ECTA, APRAM, UNION, MARQUES, AIPPI, EFPIA). INTA said they had not reached an agreement within the membership, but supports harmonization.

    8. Class fees. The reason behind this proposal is the attempt to reduce the so called "cluttering of the register".

    The user associations had different opinions on this issue. Some were said that there was no prove of cluttering and, therefore, were in favour of maintaining the current system covering three classes with the filing fee (e.g. AIM, GRUR, Business Europe, ...), whereas other associations supported a single class fee (e.g. ECTA, CIPA, FICPI). Even other associations stated that a change from the three-class practice to a single-class practice would be acceptable if, and only if, the filing fee was reduced to the extent that, if three classes are claimed, the amount of fees is not higher than the current filing fee (e.g. MARQUES, APRAM, UNION, INTA).

    9. Certification marks. Such system is in place e.g. in the UK and France.

    GRUR suggested that this new type of trademark should first be analyzed in more detail, e.g. how it is dealt with in various member states and whether certain problems have arisen there.

    Some user associations supported the creation of certification mark protection (e.g. CIPA, APRAM), also because International trademark registrations would provide for certification marks (APRAM). The remaining user associations stated that they are not generally against the creation of certification mark protection (e.g. MARQUES, ECTA, AIM, INTA, FPIA), but more details would be needed before creating such system (INTA) and such system should not be too complicated (AIM). ECTA pointed out that special rules would be needed, including e.g. compensation rules in case of infringement.

    10. E-business: ECTA stated that e-certificates could create problems before some courts and authorities. GRUR added that such problems are less within the European member states but more severe outside Europe and worldwide.

    AIM suggested to provide certification on EU level free of charge, in case such certification is needed in addition to an e-certificate. INTA added that a legal basis should be provided for the recognition of an e-certificate in the EU.

    General questions: Although not provided for in the original agenda, the user associations were given the opportunity to raise general questions.

    AIM explained that a move to 100% e-business should not be made too fast, considering that small entities and areas within the European union are not having a complete IT infrastructure.

    Concluding remarks by Commission services: The hearing was concluded with the statement of the Commission that, apparently, the user associations would not desire any changes, except harmonization. The Commission added that the Commission would only consider necessary to fine tune the current system.

    The Commission considered the most important message that "genuine use" is an important element of the system in practice.

    Also, the Commission stated that they have understood that the user association would expect particular services in exchange for the 50% renewal fees and further stated that this has always been supported by the Commission, but that the national offices would have to cooperate. The Commission further understood that the distribution of the 50% renewal fees should depend on how much service the national offices are providing for the users.

    The Commission will now draw up a proposal (hopefully) by the middle of October. In the meantime, further comments and input would still be welcome.